Kellar and Carib West Ltd v Williams
| Jurisdiction | UK Non-devolved |
| Judge | Carswell, L.,Lord Carswell |
| Judgment Date | 24 June 2004 |
| Neutral Citation | [2004] UKPC 30 |
| Date | 24 June 2004 |
| Docket Number | Privy Council Appeal No. 13 of 2003,Appeal No. 13 of 2003 |
| Court | Privy Council |
Lord Hope of Craighead; Lord Hutton; Lord Scott of Foscote; Lord Carswell; Dame Sian Ellis
Privy Council Appeal No. 13 of 2003
Privy Council
Civil practice and procedure — Appeal — Whether the variation constituted a conditional fee agreement which should not have been enforced on the ground of public policy — Whether the variation agreement was void for want of consideration — Whether the original agreement was itself a conditional fee agreement.
This appeal from the Court of Appeal of the Turks and Caicos Islands concerns the costs of two extensive and long drawn-out pieces of litigation, in which the respondent was successful on most issues against the appellants. The effect of the decision against which the appeal is brought is that the respondent's several bills of costs are to be taxed on the basis of a quantum meruit. The appellants challenge the correctness of that decision and also maintain that the contract between the respondent and his attorneys was unenforceable, since it constituted an unlawful conditional fee agreement, and that the respondent accordingly cannot recover any costs against the appellants.
Prior to 1993 the respondent Stanley A Williams and the appellant Kenneth L Kellar held between them the entire shareholding in a shipping company Sunrise Agency Ltd. The respondent was also the general manager of the appellant company Carib West Ltd, a liquor retailer of which Mr. Kellar was the major shareholder and in effect beneficial owner. Differences arose between the respondent and Mr. Kellar, in consequence of which Mr. Kellar petitioned to have Sunrise Agency Ltd wound up and dismissed the respondent from his post with Carib West Ltd.
The respondent embarked upon two main pieces of litigation, in both of which he was ultimately successful. In one he brought an action against Carib West Ltd to recover monies which he claimed to be due under his terminated contract of employment. He succeeded in this action at first instance and on appeal. In the second set of proceedings he brought on the petition for the winding up of Sunrise Agency Ltd, which Mr. Kellar does not appear to have pursued. The Court made a winding up order and gave the respondent his costs, to be paid out of the assets (order of 10 June 1993). He then sought and obtained a direction in his favour about the treatment of funds belonging to Sunrise Agency Ltd, the issue being whether certain funds were to be treated as capital contributions or shareholder loans. By an order of 19 May 1995 the respondent was given his costs of the issue, to be paid by The Company. The appeals brought by Mr. Kellar against the direction were dismissed by the Court of Appeal and the Privy Council.
The respondent obtained the above-mentioned orders for the payment to him of his costs of the several sets of proceedings. Since the dispute in the winding up of Sunrise Agency Ltd, which was solvent, was treated as being between the individual contributories and since the shareholding in Carib West Ltd was beneficially owned by Mr. Kellar, the taxation became in effect an issue between the respondent and Mr. Kellar.
Following the decision of the Privy Council in February 2000 the respondent's attorneys prepared bills of costs and furnished them to the appellant's attorneys. As they were not agreed a taxation hearing was held in July 2001 before the taxing officer, the Registrar of the Supreme Court and the Court of Appeal. Counsel for the appellants raised a large number of objections to the bills but advanced in particular two preliminary points about the respondent's entitlement to costs, first, on the ground that no fee notes had been rendered to him by his attorneys and, secondly, because it was claimed that he and his attorneys had entered into an unenforceable conditional fee agreement.
It is not necessary for the purposes of this judgment to set out the several costs orders and details of the bills submitted by the respondent's attorneys for payment by Mr. Kellar, which the latter's attorneys claimed were fluctuating and unreliable. In order to judge the correctness of the submissions advanced before the Board by counsel for the appellant one must make some reference to documents which were produced at the hearing before the The Company, upon which the appellant relied in making those submissions.
On 30 September 1996 the respondents' attorneys had filed applications to tax bills of costs relating to the winding up of Sunrise Agency Ltd. There were annexed to the applications documents entitled “Draft bill of costs on a party and party basis”. One of these draft bills specified a brief fee of $40,000.00, setting out a number of factors to which the attorneys had particular regard. The factor numbered (g) read as follows:
“the overwhelming success of Williams on all grounds in having Kellar's position rejected by the Court and Williams position fully endorsed by the Court, together with numerous findings of credibility against Kellar and in favour of Williams.”
It was claimed on behalf of the appellant that this was evidence of the existence of an arrangement that a higher fee would be charged in the event of success, which constituted an unenforceable conditional fee agreement. It should be mentioned at this point that the brief fee referred to was not the same as a separate and specific fee paid to counsel conducting the case on the instructions of the attorneys. The profession is fused in the Turks and Caicos Islands, and it was the practice at that time to seek remuneration for litigation by charging a lump sum, termed a brief fee, in respect of the lawyers' conduct of the proceedings in Court, together with hourly charges for preparatory and other work done. In November 1999 the Chief Justice ruled in another matter that it was not legitimate to seek both brief fees and hourly charges in such a way as to involve double charging. In his judgment in the present case he observed that the import of this ruling appeared to have been misunderstood by the respondent or his attorneys.
The taxation of costs did not proceed at this time and it appears that the parties adopted Mr. Kellar's suggestion that it be deferred until the Privy Council gave judgment in the appeal in the winding-up matter. After the completion of the litigation the respondent's attorneys commenced the task of preparing what they referred to as “revised bills of costs” in the two matters for taxation, which were for larger amounts than those prepared in 1996. In a letter dated 6 October 2000 to the appellants' attorneys Mr. Richard Savory, the principal of the firm, specified seven bills of costs which he expected to submit and went on:
“Bills of cost previously prepared in my office, based on my agreement with Stanley, have been calculated on the basis an hourly rate of $350 plus brief fees. However, with a view to simplifying the procedure, and to make your consideration of the bills easier (as well as the Court's if that becomes necessary), I propose to submit revised bills based on time alone and agreed hourly rates.
My firm's hourly rates have increased over time and I have applied different rates to different matters, with the highest rate always being applied to commercial matters and cases such as those here. Where in the past fees recovered on taxation have included brief fees, that has increased the effective hourly rate in some cases quite considerably. Also, I believe that there is a case for higher hourly rates in the Court of Appeal and Privy Council, but for present purposes have not made that distinction.”
The letter asked the appellant's attorneys to agree schedules of hourly rates for work done by specified persons in the respondent's attorneys' firm.
On 21 June 2001 the respondent swore an affidavit, entitled his seventh affidavit, in the course of which he stated in paragraph 2(a), (b) and (e):
“2. Particulars of the agreement which I have had with Richard Savory since his firm Savory & Co. began representing me in these proceedings are as follows:
(a) The firm's fees would be such as were normally charged by Savory and Co. from time to time in commercial cases before the Courts of Turks & Caicos.
(b) At the time we first made our agreement, I understood that lawyers generally followed the Bar Association Scale of Minimum Fees which had been in existence since 1980, as applied by the Court from time to time. In relation to this case, I understood that Savory & Co. would charge for time spent by its attorneys and law clerks at hourly rates according to the qualifications and experience of the person concerned, but that in relation to preparation for and attendance at Court, fees would be charged on the basis of a reasonable ‘brief fee’ determined according to a number of factors, including the complexity of the matter, the expertise and experience of the attorney, the length of the trial, the number and importance of the documents involved, and the amount of money involved. I understood that the common practice was for the amount of the brief fee to be arrived at after the trial, when all the factors involved were able to be taken into account, and that the brief fee so determined would be either agreed with the other side or assessed for reasonableness on a taxation. I understood that fees for cases in the Court of Appeal and Privy Council would be higher than those in the Supreme Court. In or about April last year, Mr. Savory informed [me] that there were new Supreme Court Rules, and that the Chief Justice had ruled in another case that unless the amount of a brief fee had been specifically agreed beforehand, such a fee could not be claimed, and that all attendances should be charged on a time-spent basis. I agreed that instead of proceeding on the previous system which allowed for a substantial brief fee to...
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